The European Systemic Risk Board is concerned that covered bonds could be fuelling financial imbalances — a claim that some analysts find tenuous. They do, however, agree that house prices are overvalued, particularly in some Nordic countries where the ESRB has identified a risk of financial contagion.
The ESRB published a report on September 22 looking at vulnerabilities in the real estate sector in the European Economic Area.
Norway, Denmark, Sweden, Luxembourg and the Netherlands were deemed “high risk” countries by the ESRB, largely as a result of overvalued house prices and high indebtedness.
These problems are